Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Here’s What Hedge Funds Think About Quanex Building Products Corporation (NX)

We at Insider Monkey have gone over 738 13F filings that hedge funds and famous value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st. In this article we look at what those investors think of Quanex Building Products Corporation (NYSE:NX).

Hedge fund interest in Quanex Building Products Corporation (NYSE:NX) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as 111, Inc. (NASDAQ:YI), Montage Resources Corporation (NYSE:MR), and Boston Omaha Corporation (NASDAQ:BOMN) to gather more data points.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Chuck Royce

Let’s take a look at the recent hedge fund action encompassing Quanex Building Products Corporation (NYSE:NX).

How have hedgies been trading Quanex Building Products Corporation (NYSE:NX)?

At Q1’s end, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. By comparison, 14 hedge funds held shares or bullish call options in NX a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with NX Positions

Among these funds, Renaissance Technologies held the most valuable stake in Quanex Building Products Corporation (NYSE:NX), which was worth $12.6 million at the end of the first quarter. On the second spot was Royce & Associates which amassed $12.2 million worth of shares. Moreover, D E Shaw, Citadel Investment Group, and Millennium Management were also bullish on Quanex Building Products Corporation (NYSE:NX), allocating a large percentage of their portfolios to this stock.

Judging by the fact that Quanex Building Products Corporation (NYSE:NX) has experienced falling interest from the aggregate hedge fund industry, we can see that there lies a certain “tier” of funds that slashed their positions entirely heading into Q3. Interestingly, Kevin Oram and Peter Uddo’s Praesidium Investment Management Company dumped the largest investment of the 700 funds tracked by Insider Monkey, valued at close to $3 million in stock, and Jeffrey Talpins’s Element Capital Management was right behind this move, as the fund said goodbye to about $0.4 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks similar to Quanex Building Products Corporation (NYSE:NX). We will take a look at 111, Inc. (NASDAQ:YI), Montage Resources Corporation (NYSE:MR), Boston Omaha Corporation (NASDAQ:BOMN), and TuanChe Limited (NASDAQ:TC). This group of stocks’ market valuations resemble NX’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
YI 3 13149 0
MR 12 52736 4
BOMN 5 261009 1
TC 1 283 1
Average 5.25 81794 1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $82 million. That figure was $45 million in NX’s case. Montage Resources Corporation (NYSE:MR) is the most popular stock in this table. On the other hand TuanChe Limited (NASDAQ:TC) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Quanex Building Products Corporation (NYSE:NX) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on NX as the stock returned 10.5% during the same period and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

Disclosure: None. This article was originally published at Insider Monkey.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading...